Banks, lenders and other financial services companies have similarities with many other businesses in that they will own and use brands, which are important to protect, maintain and exploit. This article gives suggestions for good brand management, ensuring your brands do not encroach on others' rights and how to protect them, as well as considering brand-licensing issues.
Avoiding infringing others' rights

The key to developing a brand is knowing your market: you should consider whether, deliberately or not, you might have "borrowed" other companies' indicia (language, logos or pictures) in developing your new brand. Other people have also spent time and money developing their brand - it is a small world and inspiration is often sought from other companies' branding.

One way of ensuring you are not infringing others' rights is to undertake a clearance search on your proposed brand. Professional advice should be sought for this, as trademarks are registered in classes, and infringements can arise if you use a trademark in a sector that is similar, but not the same as, a sector in which it is registered.

Searches should be carried out according to where you are going to use your brand - if you have a European presence, you should carry out the search for the European countries in which you trade. Remember that registered trademarks are territorial, and therefore a competing company's brand may be registered in one country but not in another.

Protect your investment

Creating a brand can cost a significant sum of money - that money is investment in the future goodwill of the business and needs protecting. There are a couple of ways of protecting a new brand:
Registering a trade mark (most common)
Registering a design.

If the brand is unregistered, whether by default or by choice, the only way a company will be able to protect its brand is through the law of "passing off". This is a right to seek redress through the courts where competitors are using the same or similar brand, giving rise to confusion in the minds of customers. This confusion can be difficult to establish, so it is usually worthwhile registering the trademark.

Registered trade mark

Words, logos and pictures can be registered as trademarks. A company can make a trademark application if its chosen brand is:
Distinctive for the goods or services for which the company is applying to register it
Not illegal or immoral
Not similar or identical to any earlier marks for the same or similar goods or services.

Trademarks have a great advantage compared to other intellectual property rights, because as long as you keep paying renewal fees (payable every ten years), they last forever.

Registered Design

A registered design is a registered right for the appearance of a product (its shape, colours, materials or any ornamentation applied). Examples include a particular font, the design of a web page or a logo.

Registered design rights can also protect what are commonly trademarks. For example, a logo can be registered both as a design and as a trademark. It is useful to bear this in mind because if a brand does not meet the requirements for trademark registration, a design registration may be possible. Furthermore, if you are looking to protect the appearance of website pages, a trademark cannot help but a registered design can.

There are two main requirements for design registration. It must:
Be novel (for instance not have been in the public domain for more than 12 months)
Have individual character.

A registered design right lasts for a maximum of 25 years as long as the owner keeps paying renewal fees (payable every 5 years).

Remember also that a registered design, like a trademark, is territorial. Therefore it only provides protection in the UK, but it is now possible to register your design throughout the EU (the Registered Community Design).

Licensing your brand

Third-party administrators are often given the right to use the brands of their principals when providing services on their behalf. Similarly, strategic alliances are becoming more common, as can happen when a lender collaborates with an energy company for it to provide services to the lender's customers. Both of these arrangements will commonly include a licence from the brand owner to the administrator or the strategic partner (the licensee).

It is worth mentioning that outsourcing of mortgage administration, or of any other function, comes within FSA regulation. Although the FSA is mainly concerned with protecting consumers, brand protection could arguably fall within the management of operational risk, which is regulated by the FSA.

The FSA has issued draft guidance on the relevant rules that are planned to take effect next year. Interestingly, the guidance specifically refers to the outsourcing company's considering ownership of intellectual property (which includes brands) in the termination arrangements. Understandably this is important, as the company providing the outsourced services (the service provider) may have created intellectual property during the services, and the outsourcing company would want to own such rights.

In any licensing situation, whether as a result of outsourcing or otherwise, the arrangements should include proper trademark-licensing provisions such as:
Provisions explaining how the brand can be used - in what format or colour
The brand owner's (the lender's) ability to check how the brand is being used by the licensee (the third-party administrator)
A prohibition on the licensee to register the brand, or anything similar, as a trade mark
A statement confirming that the goodwill in the brand will still be owned by the brand owner
Obligations on the licensee to inform the brand owner if it becomes aware that any other person is using the brand without the owner's permission, and conversely, if the licensee becomes aware that the brand infringes any third-party rights
Provisions allowing the brand owner to end the licence if the licensee goes insolvent or breaches the licence.

From the licensee's point of view, it is likely to want assurances from the brand owner that include:
The brand owner owns the brand, and it does not infringe any other person's rights
The brand owner compensates the licensee if the licensee suffers any loss arising from the brand's infringing anyone's rights.

Whether or not these assurances are acceptable to the brand owner will depend on the circumstances of the licence: if it is a low-value non-exclusive licence, the brand owner is more likely to resist such provisions.

If you do licence your brands, it should be well thought out and comprehensively documented; good file and document management is equally important, so you know what rights you have licensed and to whom.

Tips and Traps

Many companies labour under the misunderstanding that when you have registered your company name, you do not need to do anything more to protect your brand. This is not true, as a company name only gives you the right to prevent another company registering precisely the same name - it does not prevent another company trading using that name or using that name as a product name.
Trademark or registered design? Registered design rights are relatively new, and there have been no infringement cases under the new law. Furthermore, a slight variation in a design may mean that the registered design right is not infringed; as a result, the owner would not have sufficient protection. On balance, trademarks are tried and tested and therefore are still the most favoured horse for this course.
When your trade mark is registered, let the world know. Use the appropriate symbol on brochures and other appropriate written materials. However, don't get confused with the copyright symbol and trademarks - copyright is designed to protect original literary artistic and written works (as well as films, music etc.) and is a different and separate right from trademark rights.
When you have your trademark or design rights, this is not the end of the story. It is important to maintain an audit of what brands you own, monitor their usage and learn how to identify infringement and take swift action.
You may see TM - but what does this actually mean? Although it is often used, it is "Totally Meaningless" in this country and provides no protection in itself. It is just a name or symbol used to show that a product is made by a particular company and legally registered so that no other manufacturer can use it.

For further information on this subject please contact James Touzel or Jessica Bent.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2003. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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James Touzel, head of technology and media at TLT, and intellectual-property and branding specialist Jessica Bent look at branding in the financial services industry.

This article was first published in the Mortgage Finance Gazette (www.mfgonline.co.uk) in July 2003.

The source: TLT Solicitors
http://www.tltsolicitors.com